As I write this, two of the three top headlines on a popular
news website are about money. Our
culture is, to a very large extent, based on the tenet that money is the most
important thing; so important, in fact, that it can buy you happiness (which is the OTHER most important thing). Take the example set by the “Occupy *”
movement. What’s the picture that just
popped into your head? Was it a
protestor holding up a sign proclaiming something like, “I’m part of the
99%!”? The idea that money makes us
happy is, at best, ridiculous and at worst is exactly what the Bible claims;
“For the love of money is the root of all evil: which while some coveted after,
they have erred from the faith, and pierced themselves through with many sorrows”. Somewhere in the complex mathematics of
social anthropology there is certainly an algorithm that correctly identifies
the perfect amount of money one needs to be happy. The Nobel Prize in economics surely awaits
the person to write it. For now, we’re
stuck, once again, with our biases.
The misnomer that money motivates is rampant in
business. I believe it is the number one
incentive on any managers list of things to throw at an underperforming team
(“Incentive” and “money” are practically synonyms in American Business); and
this is precisely the trouble with managers these days: they’re usually trying
to manage entire teams all at once.
So what is the
best way to motivate people? Well it
turns out it may actually be money. But
even if that’s the case and most of your employees respond positively to
promises of trading more cash for better performance, there are still all sorts
of dilemmas left over. How much is the
right amount? Where do the diminishing
returns begin? How long can I ask them
to sustain performance before the money loses its value? The answers to all of these questions are
going to be different for everyone.
My personal philosophy on incentives is much simpler than
worrying about complex compensation and reward systems: ASK THEM. That’s right, it’s that simple. Just ask.
Anything that incents can technically be called an incentive. This means that a smile, a high five, a
sticker and even the words “thank you” can be used as extremely powerful
incentives. The problem is these things
are underutilized and I think it’s leading the largest companies in the world
to spend billions of unnecessary dollars a year on long term bonus systems that
don’t offer line of sight from performance to payout. This is not rocket science. If an employee does not look at their annual
bonus check and immediately flash back to the accomplishment of all of their
specific goals over the past 12 months, the bonus system has failed. If instead the employee sees dollar signs and
starts daydreaming about that new car or their new hot tub, the bonus system
has failed.
The biggest risk with any incentive, big or small, is
entitlement. The line between earned and
entitled is so razor thin that it becomes extremely important to carefully
track and gauge employee reaction to your incentive. Too much negative reaction when the stimulus
is suddenly absent denotes expectation and expectation will almost always lead
to entitlement. So vary it up. Find out a number of your employees’ personal
interests so that there’s always a new and exciting way to say thank you for a
job well done. I’ll touch on desired and
undesired behaviors at some point but, for now, suffice to say that if you’re
appropriately incenting your employees, eventually the natural byproduct is
going to be the most coveted thing in all of business: discretionary effort.
None of this is easy unfortunately. Unless we’re ever somehow miraculously able
to oversimplify human behavior, designing an incentive program that works for
your team is always going to be hard work.
The point I’m trying to make is that, well, it’s worth it. Not only will you eventually start to see
that discretionary effort, your people are actually going to enjoy coming to
work (almost) every day.